“Made in the USA” Representations of Origin. History 1980’s NAFTA and beginning of globalization led to loss of high-paying jobs 1980’s NAFTA and beginning.

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Presentation on theme: "“Made in the USA” Representations of Origin. History 1980’s NAFTA and beginning of globalization led to loss of high-paying jobs 1980’s NAFTA and beginning."— Presentation transcript:

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A. 1992 American Automobile Labeling Act Requires manufacturers to put label on every vehicle sold in US Requires manufacturers to put label on every vehicle sold in US Label must contain the following: Label must contain the following: 1. Percentage (by value) of equipment of US/Canadian origin installed on vehicles in carline to which vehicle belongs identified as “US/Canadian content”identified as “US/Canadian content” 2. Final assembly place for vehicle by city, state and country

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3. If at least 15% (by value) of equipment in a carline originated in any country other than the US and Canada names of at least the two countries in which greatest amount (by value) of that equipment originated; andnames of at least the two countries in which greatest amount (by value) of that equipment originated; and percentage (by value) of equipment originating in each countrypercentage (by value) of equipment originating in each country 4. Country of origin of engine and transmission for each vehicle

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Covers all U.S. origin claims, including Covers all U.S. origin claims, including labelinglabeling advertisingadvertising all other forms of marketingall other forms of marketing Applies to express claims Applies to express claims "Made in USA" and "American Made""Made in USA" and "American Made" Applies to implied claims Applies to implied claims use of U.S. flag, mapsuse of U.S. flag, maps references to U.S. headquarters or locationsreferences to U.S. headquarters or locations references to "American Quality," etc.references to "American Quality," etc.

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Standard Product must be “all or virtually all made in the United States” with de minimis or negligible foreign content Product must be “all or virtually all made in the United States” with de minimis or negligible foreign content No “bright line” standard (e.g., 75%) No “bright line” standard (e.g., 75%) Under pressure from Congress, FTC dropped proposal to allow 25% foreign contentUnder pressure from Congress, FTC dropped proposal to allow 25% foreign content FTC considers claims on a case-by-case basis FTC considers claims on a case-by-case basis Examines three key factors: Examines three key factors: 1.Site of final assembly or processing 2.Proportion of U.S. manufacturing costs 3.Remoteness of foreign content

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1. Site of final assembly or processing Product must have been “last substantially transformed” in the U.S. Product must have been “last substantially transformed” in the U.S. Even if all the parts are American- made, foreign assembly invalidates claim Even if all the parts are American- made, foreign assembly invalidates claim E.g., computer assembled in Mexico from parts made in the U.S.E.g., computer assembled in Mexico from parts made in the U.S.

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2. Proportion of U.S. Manufacturing Costs Greater the total cost of manufacturing attributable to U.S. costs relative to foreign costs, greater the likelihood of being "all or virtually all made in the U.S." Greater the total cost of manufacturing attributable to U.S. costs relative to foreign costs, greater the likelihood of being "all or virtually all made in the U.S." Depends in part on the product and consumer expectations Depends in part on the product and consumer expectations E.g., consumers may know that certain components are not available in the U.S. (bamboo?)E.g., consumers may know that certain components are not available in the U.S. (bamboo?)

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3. Remoteness of foreign content FTC will consider not only amount of foreign content but also how far removed from finished product FTC will consider not only amount of foreign content but also how far removed from finished product Further back in manufacturing process it is, less significant it will be Further back in manufacturing process it is, less significant it will be

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Qualifying claims of U.S. origin Marketers may avoid problems by accurately qualifying their claims Marketers may avoid problems by accurately qualifying their claims May make general qualification May make general qualification "Made in the USA of U.S. and imported parts""Made in the USA of U.S. and imported parts" May make specific qualification May make specific qualification "Made in the USA with 50% U.S. content”"Made in the USA with 50% U.S. content” "Made in the USA from imported leather""Made in the USA from imported leather"

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Example 1 Gold is imported into U.S. and then made into gold rings and other jewelry by American jewelers Gold is imported into U.S. and then made into gold rings and other jewelry by American jewelers Can seller claim rings and other jewelry were "Made in USA“ or “American-Made”? Can seller claim rings and other jewelry were "Made in USA“ or “American-Made”? 1. “Last transformed” in the U.S. 2. Gold the major component of the manufacturing cost 3. Foreign content not remote

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Example 2 Company produces propane barbecue grills at plant in Nevada. Product’s major components include gas valve, burner and aluminum housing, each of which is made in U.S. Knobs imported from Mexico Company produces propane barbecue grills at plant in Nevada. Product’s major components include gas valve, burner and aluminum housing, each of which is made in U.S. Knobs imported from Mexico Is an unqualified "Made in USA" claim likely to be deceptive? Is an unqualified "Made in USA" claim likely to be deceptive? 1. Site of final assembly or processing 2. Proportion of U.S. manufacturing costs 3. Remoteness of foreign content

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Example 3 Table lamp assembled in U.S. from American-made brass, American-made Tiffany-style lampshade, and imported base. Base accounts for a small percent of the total cost of making the lamp Table lamp assembled in U.S. from American-made brass, American-made Tiffany-style lampshade, and imported base. Base accounts for a small percent of the total cost of making the lamp Is an unqualified "Made in USA" claim deceptive? Is an unqualified "Made in USA" claim deceptive? 1. Site of final assembly or processing 2. Proportion of U.S. manufacturing costs 3. Remoteness of foreign content

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Example 4 Company manufactures food processors in its U.S. plant, making most of the parts, including housing and blade, from U.S. materials. Motor, which constitutes 50 percent of processor’s total manufacturing costs, bought from U.S. supplier. Motor is assembled in U.S. factory. Company manufactures food processors in its U.S. plant, making most of the parts, including housing and blade, from U.S. materials. Motor, which constitutes 50 percent of processor’s total manufacturing costs, bought from U.S. supplier. Motor is assembled in U.S. factory. Can seller make unqualified claim of "Made in USA"? Can seller make unqualified claim of "Made in USA"? What do you need to find out first? What do you need to find out first? Where do the major components of the motor come from? Where do the major components of the motor come from?

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Example 5 After years of working out of your Burlington apartment, you have invented and obtained a patent on a new product. The product is actually built in Malaysia. After years of working out of your Burlington apartment, you have invented and obtained a patent on a new product. The product is actually built in Malaysia. Can you advertise the product as "created in USA"? Can you advertise the product as "created in USA"? Consumers will reasonably interpret “created” to mean “made” Consumers will reasonably interpret “created” to mean “made” It is last substantially transformed outside the U.S. It is last substantially transformed outside the U.S.

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Example 6 You market a clock radio assembled in U.S. of U.S.-made components, except that plastic case was made from imported petroleum You market a clock radio assembled in U.S. of U.S.-made components, except that plastic case was made from imported petroleum Can you make a Made in USA claim? Can you make a Made in USA claim? The petroleum is far enough removed from the finished product, and is an insignificant part of it as well The petroleum is far enough removed from the finished product, and is an insignificant part of it as well

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Sticker required by American Automobile Labeling Act was apparently not on vehicle Sticker required by American Automobile Labeling Act was apparently not on vehicle Had it been there, would have reflected that majority of parts were U.S./Canadian origin, with 25% from Japan Had it been there, would have reflected that majority of parts were U.S./Canadian origin, with 25% from Japan

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California “Made in USA” law Prohibits claim if Prohibits claim if any article, unit or part (of product)any article, unit or part (of product) substantially made, manufactured, or produced outside of the United Statessubstantially made, manufactured, or produced outside of the United States Recent cases Recent cases Leatherman Tool Group, Inc.Leatherman Tool Group, Inc. Kwikset Corp.Kwikset Corp. Kwikset case suggests claim cannot be made if screw or pin made outside US Kwikset case suggests claim cannot be made if screw or pin made outside US

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California wine labeling law Under federal law, wine bearing name of specific region must be 75% from grapes from that region Under federal law, wine bearing name of specific region must be 75% from grapes from that region Federal law does not apply to brand names in use prior to 1986 Federal law does not apply to brand names in use prior to 1986 Even if no grapes from regionEven if no grapes from region If label discloses true geographic source of grapes usedIf label discloses true geographic source of grapes used

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Calif. passed law prohibiting use of “Napa” on label unless 75% of grapes grown in Napa County Calif. passed law prohibiting use of “Napa” on label unless 75% of grapes grown in Napa County Bronco Wine Co. sued Bronco Wine Co. sued California Supreme Court held states are free to supplement federal regulations with state regulation to prevent consumer deception relating to wine labeling California Supreme Court held states are free to supplement federal regulations with state regulation to prevent consumer deception relating to wine labeling